June 28, 2018

Booker, Warren Question DOJ, FTC on Policy Allowing Employers to Share Compensation Data

Current “safety zone” policy significantly advantages employers - who have access to detailed compensation surveys - over workers, resulting in reduced wages, Senators write

WASHINGTON, D.C. - U.S. Senators Cory Booker (D-NJ) and Elizabeth Warren (D-MA) today questioned the Department of Justice and the Federal Trade Commission (FTC) over a policy, known as the “safety zone” policy, that allows employers to exchange detailed wage data without violating antitrust laws. The Senators warned that this policy has produced an imbalance in access to wage information that unfairly advantages employers over workers—and ultimately holds down workers’ wages.
In a letter sent today to Attorney General Jeff Sessions and FTC Chair Joseph Simons, the Senators detailed their concerns.
“The ‘safety zone’ policy…was contingent on maintaining a balance that would prevent employers from using their informational leverage to hold pay below market levels,” the Senators wrote.
The policy was intended to strike a balance between enabling employers to adjust wages based on market conditions and risking collusion by the same employers to set wages. But the Senators urged the agencies to examine how the policy is operating in practice.
“We are concerned that the current ‘safety zone’ policy clearly advantages employers over workers, with significant negative impacts on wages and benefits. Because workers are kept in the dark about their compensation relative to others’ with similar experience and abilities, they are unable to negotiate effectively for the wages and benefits that are commensurate to their value to the firm.”
This imbalance means that “American workers receive wages and compensation well below the economic value they create,” the Senators added, and may be a key factor in stagnant wages for many workers.
More broadly, the Senators stressed, the “lack of pay transparency…is also a significant contributing factor in perpetuating gender and racial pay gaps, because it is harder for workers to find out that they are being underpaid in the first place.”
Booker and Warren asked the Justice Department and the FTC how they intended to address the growing risks associated with the sharing of wage data among employers, and whether or not the agencies had any plans to revisit or change the “safety zone” guidance.

Full text of the letter can be found here.